Hershey Foods vs. Tootsie Rolls - Free Essay Example

Sample details Pages: 4 Words: 1340 Downloads: 7 Date added: 2017/09/15 Category Business Essay Type Compare and contrast essay Did you like this example? Investment: Heshery Foods versus Tootsie Rolls Financial Comparison A comparison of 2004 Hershey’s and Tootsie Roll, questions needed to determine which company is better off: Are the company’s operations profitable? To consider this I will be looking at the Income Statement. If the company’s revenue exceeds its expenses it will report net income or will report a net loss. This will report on the success or failure of the company’s operation by reporting its revenue and expenses. Hershey Foods reports a net income of $590,879 and Tootsie Roll Industries report a net income of $64,174. Overall, both company’s report a net gain. However, Hershey Foods net income is larger than that of Tootsie Roll Industries by $526,705. Does the company rely primarily on debit or stockholders’ equity to finance its assets? To consider this I will be looking at Balance sheet. Comparing the amount of debt versus the amount of stockholders’ equity to determine whether the company relies more on creditors or owner for it financing. This reports the company’s resource and claims to those resources. The two types of claims are liabilities and stockholders’ equity. Don’t waste time! Our writers will create an original "Hershey Foods vs. Tootsie Rolls" essay for you Create order Hershey Foods reports a balance sheet of assets of $3,797,531, liabilities of $2,708,229 and stockholders’ equity of $1,089,302. Tootsie Roll Industries reports a balance sheet of assets of $811,753, liabilities $241,574 and stockholders’ equity $570,179. Hershey Food relies more on creditors versus Tootsie Roll whom relies on its own financing. How does the company’s earnings performance suggest performance? A high measure suggests improved performance and low measure suggests weak performance. Hershey Foods reports Earnings per share and earnings of $2. 30 versus Tootsie Roll Industry earning of $1. 3. Overall, Hershey Foods has a higher performance over Tootsie Roll Industry. Can the company meet its near-term obligations? To consider this I will be looking at current assets and current liabilities. Higher ratio suggests favorable liquidity. Hershey Foods current assets are $3,797,531 and current liabilities are $2,708,229 which Current ratio is 1. 4:1. This r atio shows a favorable liquidity. As for Tootsie Roll the current assets are $811,753 and current liabilities are $241,574 this gives the current ratio of 3. 4:1 suggest a favorable liquidity. In short Tootsie Roll Industries has a more favorable liquidity. Can the company meet its long-term obligation? To consider this I will look at total debt and total assets. By looking at this as a ratio lower value suggests favorable solvency. Hershey Foods Debt to total assets ratio is 74 % represents an unfavorable solvency. As for Tootsie Roll Industries ratio is 29. 8% represents a favorable solvency. Overall, Tootsie Roll Industries has a more favorable solvency over Hershey Foods. How much cash did the company generate to expand operation, pay off debts or distribute dividends? To consider this I looked at free cash flow which comes from cash provided by operation activities, cash spent, on fixed assets and cash dividends. The amount of free cash flow indicates greater potential to finance new investment and pay additional dividends. Hershey Foods free cash flow is $56,989, this is low and indicates low potential to finance new investment and pay additional dividends. As for Tootsie Roll Industries $54,837 is also low. Overall Hershey Foods has a higher amount of free cash flow. Is the price of goods keeping pace with changes in the cost of inventory? To consider this we need Gross profit and net sales. The ratio suggests the average margin between selling price and inventory cost is increasing. Too high of a margin results in lost of sale. Hershey Foods gross profit is 20. 4%, this percent is low which indicates a gain of sales. As for Tootsie Roll Industries the percent is 41. 8% which indicates in a lost of sales. Overall, Hershey Foods has a lower lost of sales. Is the company maintaining an adequate margin between sales and expenses? To consider this we need to look at net income and net sales. A higher value suggests favorable return on each dollar of sales. Hershey Foods profit margin ratio 13. 3% represents a low favorable return on each dollar of sales. As for Tootsie Roll Industries the ratio is 15. 3% which is low. However, Hershey Foods ratio is less favorable than Tootsie Roll Industries. How long is an item in inventory? To consider this we need cost of goods sold; beginning and ending inventory. The higher the ratio or lower average days in inventory suggest that management is reducing the amount of inventory on relative to sales. Hershey Foods inventory ratio is 4. 80 and days in inventory are 76 days. As for Tootsie Roll Industries the inventory ratio 4. 5 and days in inventory is 81 days. Both represents that management is not reducing the amount of inventory compare to sales. Overall, Hershey Foods is better of then Tootsie Roll. Are collections being made in time fashion? To consider this we need net credit sales and average receivable balance. This ratio indicates average collection period should be consistent with corporate credit policy. An increase suggests a decline in financial health of customers. Hershey Food Receivable turnover ratio is 10. 8 and average collection period is 33. 8. As for Tootsie Roll the ratio is 10. 8 and average collection period is 33. 8. Overall, both companies have low ratios which indicate there is no decline in financial health of customers. Is the company using its assets effectively? To consider this we need net income and average assets. The ratio represents if there is a high values which suggests favorable efficiency-use of assets. Hershey Foods return on asset ratio is 0. 16 as for Tootsie Roll the ratio is 0. 08. Both represent that there is not a favorable efficiency in the use of assets. Overall, Hershey is better off then Tootsie Roll. How effective is the company at generating sales its assets? To consider this we need net sales and average total assets. The ratio indicates the sales dollars generated per dollar of assets. A high value indicates the company effectiveness in using its resource to generate sales. Hershey Foods asset turnover ratio is 1. 17 as for Tootsie Roll is 0. 2. Both are low which represents ineffectiveness in using its resource to generate sales. Overall, Hershey is better off than that of Tootsie Roll. Can the company meet its obligations in the long-term? To consider this we need interest expense and net income before interest and taxes. High ratio indicates ability to meet interest payment as scheduled. Hershey Foods Time interest earned ratio is 1. 02 as for Tootsie Roll the rati o is 193. The low ratio of Hershey indicates that the company does not have the ability to meet interest payment as scheduled. However, Tootsie roll has the ability to meet interest payment as scheduled. Tootsie is better off. What portion of its earning does the company pay out in dividends? To consider this we need net income and total cash dividends on common stock. A low ratio suggests the company is retaining its earning for investment in future growth. Hershey Foods Payout ratio is 0. 36 as for Tootsie Roll is 0. 23. Both have low ratios which indicate that they are retaining its earning for investment in future growth. Overall, Tootsie Roll ratio is better off than Hershey Foods. Is the company generating sufficient cash provided by operating activities to meet current obligations? To consider this we must look at cash provided by operating activities and average current liabilities. A high value suggests good liquidity. The numerator contains a flow measure; it provides a good supplement to the current ration Hershey Foods current cash debt coverage ratio is 0. 29, as for Tootsie Roll 0. 32. Both companies have a low liquidity. Overall, Tootsie is better off. Is the company generating sufficient cash provided by operating activities to meet its long-term obligations? To consider this we need to look at cash provided by operating activities and average total liabilities. A high value indicates the company is solvent; that is, it will meet its obligation in the long-term. Hershey Foods cash debt coverage ratio is 0. 3 as for Tootsie roll the ratio is 0. 3. Both companies are low which indicates that both companies are not solvent to meet long-term obligations. Neither company has its advantages. To conclusion I believe that Tootsie Roll is better off then Hershey Foods. The best chose for investment is Tootsie Roll.

Mgmt 530 Conference Decision Week 1 Case Analysis - 607 Words

MGMT530 – Conference Decision Week 1 Case Analysis Template 1) Define the decision problem? As indicated by the scenario it seems that the decision problem is a matter if the accounting systems annual conference that is previously scheduled to occur on September 13-16,2005 should be canceled, due to the fact Hurricane Katrina has occurred and demolished building and homes leaving them in ruin in the city of New Orleans, Louisiana. The primary issue thus becomes does the board or committee moves the conference to a future date or have conference at another location that would thus incur higher costs for hotel for patrons of the conference in addition to it would be a price increase for flights that were already scheduled to New†¦show more content†¦This conference seems to be the pinnacle point for participants to a) network/connect with current customers in addition to establishing new ones b) the distribution of new product concepts/designs that are promising for the future of that industry. If the final solution to this problem into being to move the conference to another date, there is a possibility that managers will have difficulties scheduling the speakers that were originally lined up. In addition to another time for participants to reschedule flights at economical rate and be with to use there are paid money towards another hotel location. 6) Describe the dependencies on other decisions? The decision to hold the conference depends on certain other decisions. The management has worked with the Local Convention amp; Visitor’s Bureau and the hotel for the conference and wants to help them recover the destruction. The management may want to hold the conference in the same city at some future date in order to provide an opportunity to overcome the destruction by holding the conference. The decision will also be influenced by the cost of holding the conference and the willingness of the attendees to attend the conference if the management plans to hold the conference in a different city. The decision with respect to date will also affect the holding of the conference in the same city or a different city. The management may plan theShow MoreRelatedHedge Fund Introduction12750 Words   |  51 PagesHedge Funds Class London February 2007 February 9, 2007 SECTION 1 Class Agenda Agenda â™ ¦ 9:00 - 10:30 â™ ¦ 10:30 - 10:45 â™ ¦ 10:45 - 12:15 â™ ¦ 12:15 - 1:30 â™ ¦ 1:30 - 2:15 â™ ¦ 2:15 – 3:00 â™ ¦ 3:00 - 3:15 â™ ¦ 3:15 - 4:00 â™ ¦ 4:00 - 4:45 â™ ¦ 4:45 - 5:00 Hedge Fund Basics Coffee Break Basics Continued Lunch Continued Hedge Fund Services Coffee Break Fund of Funds Stuart Trueman Joe Troccolo Tamera Hodges Joe Troccolo Joe Troccolo Hedge Funds Corp Finance Laurent Charbonnier Wrap-up / Optional ExamRead MoreProject Mgmt296381 Words   |  1186 PagesCross Reference of Project Management Body of Knowledge (PMBOK) Concepts to Text Topics Chapter 1 Modern Project Management Chapter 8 Scheduling resources and cost 1.2 Project defined 1.3 Project management defined 1.4 Projects and programs (.2) 2.1 The project life cycle (.2.3) App. G.1 The project manager App. G.7 Political and social environments F.1 Integration of project management processes [3.1] 6.5.2 Setting a schedule baseline [8.1.4] 6.5.3.1 Setting a resource schedule 6.5.2.4 Resource

Semco Transformational Plan

Question: Discuss about theSemcofor Transformational Plan. Answer: Introduction The purpose of this report if to identify the leadership and management styles adopted by Ricardo Semler and their effects on the tactical choices of Semco. It will also discover various risks taken in executing the new regime at Semco and the possible causes of imbalance generated by the styles of administration and leadership plus their collective applicability and the effects caused by the organization. Semco is an equipment manufacturing company that was established by Antonio Semler in 1912 and is found in Sao Paulo, Brazil. The company was taken over by Ricardo Semler year 1980 after his father resigned from being the COO of the company. He afterward established a management system that allowed employees to have power and was employee friendly. It has come to design a worker empowerment pattern that is free of any political discourse which was common during the 19th century in the industry of economy. The sales have grown at a 24% annual rate since he assumed the role as the pr esident of the firm. (Semler, 2009) Semcos Implementation of the Transformational Plan Is the transformational plan implemented at Semco Universally applicable? Yes, the transformational plan implemented at Semco is universally applicable. Transformational leadership is a style by which the organizational manager or the overall leader works with the juniors to ascertain any change that needs to be implemented, generates a vision to chaperon through inspiration and put forth change in line with dedicated team members. Richard Semler as a transformational leader had the aspiration, resolution, and expertise to execute the necessary changes and recognise the basics of his leadership. With this, he accomplished the degree of change needed in the dynamic environment and was able to handle crisis critically. The type of transformational plan that Richard employed started off with an idea, he put all his enthusiasm and energy into the idea with an outlook of the expectations that will motivate probable followers and later adapt to it. Initially, Semco had set rules and regulations that controlled every aspect of activities assumed in the company. H owever, Richard Semler after taking over the company embarked on transforming the firm to address the consistently poor performance experienced from the past. He started by dismissing all the top management and dismantling the existing management layers in the company. He eliminated all the job titles but the COO, which was made to be rotated among workers after every six months. This type of leadership style serves the purpose of enhancing the confidence of followers together with their job performance and motivation to execute their various duties. Semler aimed at addressing employee motivation through means that will encourage them to make the organisational goals their first priorities before their own goals. He managed to be successful because by doing the above he connected the teams feeling of identity and sense of character to a mission and the shared distinctiveness of the company. Richards leadership style is a rare one that succeeded in reforming the organisation continually to win in the world of the future generation. (Semler,2009) An organisation needs a skilled transformational leader as Richard Semler for it to be transformed that faster and prepared for future success. An organisations future depend on how many transformational leaders it has, it can be one or all of them. In this case, every team member at Semco learned to be an effective le ader in one way or the other the reason as to why they prove to be very substantial in cases of any changes and crisis management in the organisation. The transformational plan implemented is universally applicable because of the following reasons: As a result of the plan, there was improved transparency in salaries as workers were empowered in setting their working hours. The companys implementation of the reward strategy set to meet the targets set by the same team members resulted in an immediate decrease in costs, the rise in productivity and the lost profit. (Semler, 2009) Workers were motivated by the profit sharing system where the profits made were divided among workers according to what the elected committee decided. Decisions were now made after detailed discussion and debate unlike through a set of procedures as it was done in the past. As a result of its success that the company gave a group of Engineers the power to a group that had the mandate to act in any necessary way to advance innovation in technology at the plant. Changes That Improved Worker Motivation and the main changes at Semco that improved the motivation of workers. Motivation is the psychological process that stimulates people therefore guiding them towards specific goals. It inspires people to intentional engage with definite activities to keep on with them and eventually try to find benefits from doing these activities. After the retention of the COO title, the job position was made to rotate among workers every six months. This greatly improved their motivation as each strived to work harder and increase their productivity just to be selected as the next COO of the firm. The establishment of teams of workers that were self-managed also improved the motivation of workers. They were given the responsibilities of being fully in control of their production remit, which included controlling the budget and setting targets. They worked harder to achieve their targets because of the motivational aspect of the technique. This is a type of content theory of motivation defined by Herzberg, motivation factors like giving employees things like a sense of recognition, achievement or responsibility can increase job satisfaction. (Semler, 2009) The reward structure was later designed so that it could match the targets set by the teams. This is the greatest form of motivation, as each team would put in their best to reach their targets and be rewarded in return. Due to improved motivation, the firm got to gain back the lost profits and increase productivity. (Senge, 2014) Profit sharing was another new change that improved workers motivation. All the profit made was summed up and each division pf the business was given around 25% of the net profits then it was divided among workers as per the decision of a democratically elected committee. The equity theory of motivation was employed through the assessing of the team members levels of effort and then rewarding them for it. The profit sharing was the goal of the managers recognizing the need for employees to be seen being rewarded on a fair and equitable basis and adjusting any form of inequities. (Semler, 2009) The empowerment plan motivated workers to accept more responsibility given to them for managing multiple duties and putting in action their knowledge to generate new and innovative ideas on how to keep reducing costs and improving quality. The workers were given the power to hire or fire some people they deemed incompetent after a democratic vote from everyone. They were motivated to find ways in which they could tackle the challenges they faced in the company by organizing themselves. Workers who know and approve to the ideologies of their organization will organize themselves into teams needed to get the most out of their chances of accomplishing the teams desired goals. When workers have more control over their tasks, they will be motivated to become more productive and consequently more relaxed and, happy at the work site. David McClellands need theory is established in this context. It holds a great significance in understanding motivations. The need for power which is the desir e for control over others and yourself was promoted by the empowerment plan. (Semler, 2009) The manuals that used to define the factory life in the previous regime were disposed of, and a new system was adopted, decisions were made after a debate and a discussion rather than through a set of procedures as before. Payment is made by the sales percentage, this way, workers, were motivated to work hard to get the most sales to increase their payment. Possible Sources of Tension within the Existing Structure at Semco The Organisational Structure When Semler took over the company and started initiating his radical plan of running the business. He recognized that the firms highly turbulent markets needed a different organization structure to stay successful for a longer term. He reduced the size of Semcos administrative organizations by assigning its functions to the operative units. The organizations structure was redefined moving from hierarchical to business unit approach that put the team to the core. This caused a lot of tension, and as a result, Semco has no centralized data processing, there are no training departments, no rules, and no audits anymore. Because of the organizational structure changes implemented, the firm does not use a formal organization chart but rather sketch the structure of the company in pencil when it is only necessary and then dispense with it as soon as they are done. However, as a result, the ideas of self-governance and self-management were promoted, and responsibility into the overall strate gy of the organization was incorporated among the employees. (Semler, 2009) The management When he took over the firm, his first move was to dismiss all top management personnel and dismantle the existing layers of management, therefore, reducing the hierarchy from seven to three. The managers get to run their units with so much freedom from top management. This created tension in the firm, and as a result, almost an entire layer of middle managers left the business after almost a year because they felt that the newly empowered subordinates had undermined their authority.As it is well known by most scholars, the management of any initiativeneeds that someone exert control over the idea, the process, and the factors of construction in order for an economically possible product or service to materialise. Semler set up a new leadership system, the managers would put forth their plans to other members of the leadership team to get their opinion on the matter for approval. This was something that only the prerogative team used to do in the past regime. The system made leaders s how exactly how they added significance to the process because the leadership teams new roles encompassed setting budgets and therefore the management roles that were deliberated as being ineffective would be disregarded of. (Senge,2014) The Corporate Culture Semlers first moves included abolishing all the norms, manuals, rules and regulations. This caused tension because it can be very hard running an organisation without any rules and regulations. However most organisations have sets or rules and regulations that rarely solve problems. Richard expected that the workers would develop a sense of responsibility enough to take them use their common sense in every aspect.Semcos corporate culture is based on employee participation in management decisions, companywide profit sharing, and an open information culture. Semco managers and workers together make decisions The role of manager was changed and instead of the manager making all the decisions, he would have to ask the right questions for the support of the team members, this then formed a basis for decision-making in the firm. The new change in culture brought about tension, however, it brought about a competitive position build around the corporate culture that resulted in a creative RD process and a highly efficient manufacturing system. Changes in the corporate culture ensured that Semco employees were assured of representation through a democratically elected factory committee of each business unit. The workers were given the right to vote, choose and contribute to the decision making processThey were supposed to read the charter, take part, and ensure that their committee defended their interest effectively. These interests at times would not correspond to Semcos interests, therefore, bringing about a necessary and healthy conflict.(Senge, 2014) The Biggest Risks Taken By Richard Semler in Implementing the New Regime at Semco. One of the biggest risks taken by Richard Semler in implementing the new regime at Semco was starting by dismissing all the top management and dismantling all the existing layers of management for the reason of diversification. He dismissed almost every employee that had worked for the firm for a longer period and therefore had a better understanding of the business more than any new employees. It was a huge risk to take although it led to positive results. (Senge, 2014) The second risk he took was the transparency in salaries; this was something that was not common in the normal business practices. All financial information were discussed openly and freely and displayed for every person to see. Every person was able to know just how much the other is earning. He also took the risk of placing all the responsibility of overseeing processes, managing output and securing quality to the workers and later on extended it to managing salary levels, bonuses, decision-making processes. It was a huge risk to undertake in a business of such size. (Senge, 2014) He took the risk of empowering his employees by establishing self-managed teams of up to eight production workers to be fully in control over their production remit that included complete control over budgets and setting targets. (Semler, 2009) Semler took the risk of changing the work environment day by day , to some other people this will present itself as a risk towards job security, however, through these changes , he had gave all the workers, from top management to lower opportunities making every one of them do their work more sincerely. They all knew the importance of their work and therefore made wise decisions for other demographic factors, furthermore, the changes ensured that employees could not be dismissed without the proper procedure being adhered to.(Senge, 2014) Conclusion Semco is an unusual kind of organization because of its structure and the way things are done there. It managed to safely traverse through the challenging economic environment without incurring major organizational damages. It is very different from other traditional organized firms because of its open policies towards information sharing. Compared to other international companies, it is a small firm and it is not quite clear yet if the organizational principles employed by Semco and made it successful can be applied to other companies and gets the same results. It is unclear as to what the management principles at Semco cold do to a much larger organization, and it is, therefore, unclear as to whether the system could work in a highly competitive international economy due to the relatively young age of Semcos structure of an organisation. Reference Semler, R. (2009). The Seven-Day Weekend: Changing the Way Work Works. New York: Warner Books. Senge, P. A (2014). The Fifth Discipline Field book. New York: Currency Doubleday.

Marketing Metrics free essay sample

Marketing is no longer characterised by spontaneous investments. Marketing performance is controlled and diagnosed on a continuous basis, making the need for simple, but comprehensive measures/metrics to do so even more important. There are aspects of Marketing that can be identified, separated and measured. The effectiveness of a Company’s marketing department is often measured on the number of new clients and customers, the amount of leads generated and successful follow up on these leads. The main objective of any company that intends on being a major player is not only to create new customers, but to retain the ones they already have. By taking the cost of different marketing activities and comparing them against the number of sales or new customers, the success of these activities can be determined. In addition, it allows for comparison between different marketing initiatives. This facilitates the creation of an environment in which the customer can relate to the company and creates the appropriate condition for the making of sales. We will write a custom essay sample on Marketing Metrics or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The effectiveness of a company’s marketing department can be quantified by sales targets reached the enhancement of profits and improved bottom-line performance. This is achieved by making the marketing function more accountable as it ensures a continuous testing of its effectiveness through the application of scorecards. These scorecards, or metrics, allows for the development of a set of measures and provide a means through which the performance of marketing activities can be measured. One of the most important questions that should be asked is how many metrics should be used to enable measurement to be comprehensive. There are cast amount of different metrics, but not all of them are equally important or relevant. The key is to identify those metrics that are most relevant to the particular situation of the company and those that evaluate what is really important. Fundamental metrics should include quantifiable metric such as Return on Investment and number of new customers, but also non-quantifiable metrics such as brand awareness and brand equity. Most often these non-quantifiable metric are the ones that determine the long-term survival and profitability of a company. TABLE OF CONTENTS Item nrHeadingPage . Introduction5 2. How to ensure that marketing activities are measurable5 3. Reasons for growth in the use of marketing metrics5 3. 1 A corporate trend for greater accountability of value added activities 3. 2 Discontent with traditional metrics 3. 3 Availability of IT and Internet Infrastructure 4. The direction in which metrics can lead a company7 4. 1 From non-financial to financial 4. 2 F rom backward looking to forward looking 4. 3 From short-term to long-term 4. 4 From micro to macro data 4. 5 From independent metrics to causal chains 4. 6 From subjective to objective 5. An investigation of key metrics can put an organisation in the position to develop and refine new marketing initiatives to increase market share. Therefore it can be said that metrics lead the way to cost effective marketing and ensuring that marketing expenditures are worthwhile. The difference between a marketing department that is considered a highly valuable organisational asset and one that is not regarded as highly often depends on the intensity of the focus on applying marketing metrics as a measure of success. When choosing among different metrics to be used, one has to consider the cost of these as well. Marketers have previously relied heavily on applying subjective measures of performance, especially when measuring customer attitudes, product attributes and brand associations. 3. 3 Availability of IT and Internet Infrastructure. Technology facilitates the existence of new metrics. New developments such as Enterprise Resource Planning, Customer Relationship Management Software etc enables the company to make use of alternative, more immediate metrics. For instance, companies can measure the profit for each time a customer visits their stores. Therefore performance is measured more accurately.   From non-financial to financial: One of the key reasons for the undertaking of performance assessment is to ensure that corrective steps can be taken to improve it. Senior management should view marketing as actions taken in terms of financial impact and to view marketing investments the same as other types of investment will guarantee success. There has been a perception among marketers that their discipline is a â€Å"soft one† that has not been taken seriously by management. By accepting the more rigorous financial measures, they stand a better chance of gaining increased legitimacy and credibility with Top Management. Care should however be taken not to focus only on the use of financial metrics as future income can often not be predicted. Metrics measures must be non-financial (customer loyalty, market penetration) as well as financial (sales, costs and profits). The correct mix between the two needs to be determined according to the requirements of the situation. 4. 2From backward-looking to forward-looking It is better to create forward-looking estimates as the future competitive environment is different than the current one. These estimates need to take the following into account such as competitive dynamics, and initiatives such as new product launches and brand extensions. 4. 3From short-term to long-term It is more profitable to focus on the creation of long-term wealth. The challenge here lies with the fact that the longer the forecast horizon, the bolder the assumptions must be in preparing the estimates. It will continue to be a challenge to construct a valid current basis for the projection of future marketing performance. . 4From micro to macro data To succeed in a competitive environment, a company must keep in mind that often a small loss of market share can often conceal the fact that a huge number of major contributing customers have defected to the competition. 4. 5From independent metrics to causal chains This move will have major breakthroughs to effect in the areas of efficiency and control. This will allow all marketing activities to be evaluated in terms of their effect on the bottom line and will enable the selection of the most profitable actions. 4. 6From subjective to objective If an investment’s EVA is greater than zero, that option is worthwhile. EVA allows the marketing department to communicate to other departments and this increases the legitimacy of the marketing department in the eyes of the other functional departments. EVA is not used that frequently as it makes use of historical values. 5. 2The balanced scorecard approach This approach allows for the whole organisation to be looked at from different perspectives (customer perspective, innovation and learning perspective, internal business perspective and financial perspective). This allows for a more comprehensive view of the company’s situation. What makes this approach more viable is that it is partially forward looking and geared towards the long-term performance of the company. 5. 3Brand Equity Brand equity is often the biggest and most valuable asset for many companies. It can be measured by looking at customer loyalty and perceived product quality and is determined by investigating financial data showing the profits from the marketing of the brand and incorporates the value of future returns. The managing of Brand Equity is one of marketing’s most important functions, and facilitates the transfer of value in the market to the company’s customers and shareholders. 5. 4Relational Equity This equity comprises four different types of partnerships, namely supplier, lateral, internal and buyer partnerships. Swahney and Zabin (2002) define Relational Equity as the wealth creating potential that resides in the company’s relationships with its stakeholders. They also proposed the use of the Relational Maturity Model which provides a holistic measure to focus on the quality of customer relationships. This measure is primarily dependant on macro data and provides information that is generally of a subjective nature. 5. 5Customer equity This viewpoint states that the focus of the company should rather be on the customer than the brand. This is actually a valuable point as it is the customer that determines the value of the brand. The challenge for marketers would be to find the most dominant driver of customer equity for the company.

Analysis of Elasticity and the Theory of Consumer Choice

Analysis of Elasticity and the Theory of Consumer Choice Economics calculate elasticity and use the consumer choice theory to determine marketability of various commodities. Elasticity differs among items since some items are more essential to consumers than others are (Davis). The consumer choice theory is essential in determining the most attractive markets. However, it has certain shortcomings.Advertising We will write a custom essay sample on Analysis of Elasticity and the Theory of Consumer Choice specifically for you for only $16.05 $11/page Learn More The difference in elasticity is caused by the variations in the level of demand for different products. Goods and services that are necessities are insensitive to cost alterations as consumers usually purchase these items regardless of cost adjustments. Price increase of an item that is less of a necessity puts off more customers since the opportunity cost of acquiring the items becomes too high. A product is highly elastic if an insignificant alteration in it s price leads to an acute change in the supply or demand of the product. Commonly, such items are accessible in the market at all times, but consumers rarely purchase them. Conversely, an inelastic commodity is one in which price alterations may only lead to modest changes in the quality supplied and demanded. These commodities are those that tend to be more of a necessity to the customer in his/her everyday life (Moffatt). The equation for finding elasticity is percentage change of the amount of products demanded for divided by the percentage change in cost. If elasticity is equal to or greater than one, the good/service is elastic. Economists say that the higher the rate of elasticity, the lower the market for the product when the price increases. The opposite is also true. Economists and business people use the formula to understand how sensitive the demand for particular goods/services is to changes in price (Hubbard 82). To determine elasticity of goods and services, economists analysis demand curves. When the amount of products demanded diminishes significantly due to a negligible adjustment in cost, the demand curve becomes flat, and this shows that the demand for the product is elastic. On the other hand, when the curve is upright the demand is inelastic, as quantity adjusts modestly with massive alteration in cost. Elasticity of supply functions in a similar manner. When changes in supply result into a massive change in quantity supplied, the supply curve flattens and the commodity is elastic. In this case, the elasticity is higher or equal to one (Davis). However, if a substantial change in price does not have a major impact in the quantity supplied, the curve becomes steeper. Its elasticity becomes less than one. The theory of consumer choice is another vital trading tool. It is based on the hypothesis of utility and marginal utility. Economists use the terminology utility to express the contentment resulting from the consumption of a product. They say that consumers act sensibly while choosing the preferred products to exploit total utility. According to the theory, consumers always take into consideration four main factors.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More First, they consider how much satisfaction they derive from purchasing and subsequently consuming an extra unit of a product. Next, they consider the amount of money that they have to pay to acquire the product and ensure they do not lose their money. Moreover, they consider the degree of satisfaction they can derive from consuming substitute products. Finally, they evaluate the prices of the substitute products (Theory of Consumer Choice†). The experts use the term marginal utility to explain change in satisfaction that results from the consumption of each additional product. The theory of diminishing marginal utility articulates that the marginal u tility resulting from consuming a good/service decreases as the consumption of that product increases. The theory of consumer choice states that a rational consumer spends on his/her earnings in a manner that maximizes the total utility arising from all commodities consumed. For example, in case a customer intends to buy one good out of two differently priced products, total utility will be achieved when the satisfaction arising from commodity A is equal to the satisfaction arising from commodity B. In this case, the total marginal utility of A and B becomes equals to that of another similar good. Therefore, when the price of product A diminishes, the equality becomes an inequality and the consumer chooses a cheaper preference. The consumer will buy more of the product, if he/she receives more utility from it. The theory is essential as it forecasts demand and supply (Theory of Consumer Choice†). However, the theory also faces criticism. Some economists assert that it is not p ossible to measure utility impartially, as there are no systems for doing the work. Moreover, they have reservations regarding the hypothesis of rational behavior among consumers. They say consumers do not have all the information on the products available in the market and therefore cannot make rational decisions (Moffatt). The consumer choice theory, however, is a useful economic tool for determining appropriate trading patterns. Elasticity forecasts levels of demand and supply. The elasticity formula is easy to use, and all entrepreneurs can use it to improve their understanding of their markets. Davis, Marc. Microeconomics: Introduction | Investopedia. Investopedia Educating the world about finance. n.p., n.d. Web.Advertising We will write a custom essay sample on Analysis of Elasticity and the Theory of Consumer Choice specifically for you for only $16.05 $11/page Learn More Hubbard, R. Glenn, and A. P., Brien. Microeconomics. Upper Saddle River, N.J .: Pearson Prentice Hall, 2006. Print. Moffatt, Mike . Price Elasticity of Demand. Economics at About.com. N.p., n.d. Web. Theory of Consumer Choice indifference curves, consumers optimal choice. Business Economics | Introduction to Basic Economics. n.p., n.d. Web.

How to Perform the Instant Fire Chemistry Demonstration

How to Perform the Instant Fire Chemistry Demonstration Heres a simple fire chemistry demonstration that produces instant fire without using matches or any other type of flame. Potassium chlorate and ordinary table sugar are combined. When a drop of sulfuric acid is added, a reaction is catalyzed which produces heat, an amazing bright/tall purple flame, and a lot of smoke. Instant Fire Materials Potassium chloratePowdered (confectioners) sugar or table sugar (sucrose)Sulfuric acidSmall glass jar or  test tube Procedure Mix  equal parts potassium chlorate and table sugar (sucrose) in a small glass jar or test tube. Choose a container you dont value, as the demonstration will probably cause it to shatter.Place the mixture in a fume hood and equip lab safety gear (which you should be wearing anyway). To initiate the reaction, carefully add a drop or two of sulfuric acid to the powdered mixture. The mixture will burst into a tall purple flame, accompanied by heat and a lot of smoke.How it works: potassium chlorate (KClO3) is a powerful oxidizer, used in matches and fireworks. Sucrose is an easy-to-oxidize energy source. When sulfuric acid is introduced, potassium chlorate decomposes to produce oxygen:2KClO3(s) heat - 2KCl(s) 3O2(g)The sugar burns in the presence of oxygen. The flame is purple from the heating of the potassium (similar to a flame test). Tips Perform this demonstration in a fume hood, as a considerable quantity of smoke will be produced. Alternatively, perform this demonstration outdoors.Granulated table sugar is preferable to powdered sugar which is, in turn, preferable to reagent grade sucrose. The powdered sugar is capable of smothering the fire, while the granules of the reagent-grade sucrose may be too large to support a ​good reaction.Follow proper safety precautions. Do not store the potassium chlorate and sugar mixture, as it can react spontaneously. Use care when removing the potassium chlorate from its container, to avoid sparking, which can ignite the container. Wear the usual protective gear when performing this reaction (goggles, lab coat, etc.).The Dancing Gummi Bear is a variation on this demonstration. Here, a small quantity of potassium chlorate is carefully heated in a large test tube, clamped to a ring stand over a flame, until it has melted. A Gummi Bear candy is added to the container, resultin g in a vigorous reaction. The bear dances amidst bright purple flames.

Dessertation on ''stress on international students Dissertation

Dessertation on ''stress on international students - Dissertation Example To determine the specific stressors affecting the students, I structured questionnaires intended to be filled by the international students. In the the questionnaires the students are required to fill whether they are stressed or not by the following factors. They include financial challenges, university fees, getting job in the United Kingdom, language and accommodation. In addition, the questionnaire will determine whether international students pay more fees than the local students do. The questionnaires were sent 100 the international students through the internet and they were supposed to send back the results after one day. The study will target undergraduate and graduate students and all genders. This study is informed by recent findings by Amposah (2010) which established that international students in Manchester University have considerably higher levels of stress than the local students in spite of them facing equal academic challenges. This has resulted to the students ado pting poor stress coping mechanisms including drug abuse, dropping out of school and prevalence of psychological disorders. According to Agnes and Harriet (1993), stress is the emotional feeling a person experiences while under pressure. In this regard, stress is a response of preparing the body to face anticipated tough challenges, with renewed focus, strength and high level of concentration. According to Abe, et al. (1998:21) regulated stress is a motivational factor and it enhances output of the affected person. However, too much stress arising from excessive pressure is counterproductive and it could lead to physical and mental illness. A research conducted by Amposah (2010) established that international students are very prone to stress because of enormous pressure of excelling in their studies, meeting their living expenses and adjusting in the foreign country. Stress often happens in situations that require immediate attention, but in some cases, it extends for long periods causing a lot health and behavioral problems to a person. The effects of long-term stress normally results to feelings of being overwhelmed by the challenges at hand and low energy levels to cope (Mind for better mental health, 2010). Abe, et al (1998:442) established that congested schedules that hardly leave enough time for relaxation and rest as the most prevalent stressors among international students. Though most international students face similar stressors, they have different ways of handling and coping with the stressing situations. Some externalize it by projecting their anger to other persons while other internalize the pressures resulting to mental and physical disorders .These can subsequently develop into severe health and behavioral conditions such as depression, anxiety, panic attacks , drug abuse, suicidal tendencies among others(Mind for better mental health, 2010). This study investigates stressors on international students, undertaking their studies in Manchester University in the United Kingdom. Manchester University in United Kingdom has an ancient tradition of attracting and admitting students from different countries in the world. The most common feature that attracts foreign students to universities in the UK is the high academic standards that often lack in the institutions of higher learning in their home countries. British universities are credited for producing prominent personalities in the world in their respective areas of specialization. In this respect, they attract numerous

Max Weber Research Paper Example | Topics and Well Written Essays - 1250 words

Max Weber - Research Paper Example Weber was highly inspired by German idealism and specifically by neo-Kantianism. The most significant influence of neo-Kantianism thought on Weber was the idea that reality is basically disorganized and perplexing, with all the balanced order coming from the way in which the individual mind focuses its attention on particular areas of reality and arranges the perceptions that come as an output. Social Action Max Weber viewed sociology as a science of social action. His early focus in sociology revolved around subjective meanings that individuals attach to the actions that they take and their interpretations of concepts within a particular social context (Elwell, n.d.). According to this, Weber categorizes action in four different ways. The following kinds of action can be taken. Zweckrational (the means used to achieve the required goal are rationally chosen). Wertrational (the goal one is trying to achieve might not be rational, but rational ways are used to attain it). Affective ac tion is rooted in the emotional state of an individual instead of rational thinking. Traditional action is the action that is guided or regulated by customs, habits, or traditions. According to Weber, there are many factors in action behind human behavior, and he believed that most of the behavior exercised by individuals is a mix of the above mentioned actions. He advocated that a distinctive shift in the motivation of individual behavior is a distinguishing feature of a modern society (Elwell, n.d.). Major part of his work investigates the factors that gave birth to the idea of rationalization in the western society. Weber believes that social action is an illustration of the use of an ideal type. An ideal type provides the fundamental method for comparative and historical study (Elwell, n.d.). It also helps the researcher when he or she is studying a specific area of the society. This ideal type cannot be a real phenomenon; it is a classic hypothetical example against which the r eality could be compared (Barnard, Burgess, & Kirby, 2004). Theory of Rationalization According to Weber, rationalization refers to the increasing human control over the social environment. As per this theory, there are three basic points that are individual cost-benefit analysis, the bureaucratic arrangement of organization, and understanding of reality without searching for explanations in mystery, magic, or supernatural beliefs (Allan, 2005). The process of rational thought is the sensible application of knowledge to arrive at a preferred outcome. It leads to competence, cooperation, efficiency, and power over both the natural and the social surroundings (Elwell, n.d.). It also makes individuals come out as free, as he or she breaks the net of traditional thoughts and illogical belief systems. In his later works on bureaucracy, Weber discusses rationalization in detail. Weber advocates that bureaucracies are goal-defined organizations devised according to rational factors in orde r to effectively achieve their goals (Elwell, n.d.). The bureaucratic cooperation of the actions of numerous people has become the main structural characteristic of modern societies. As regards the concept of rationalization, Weber stayed doubtful. He saw it as a two-sided phenomenon. On the

Treatment of Folk Illnesses Essay Example for Free

Treatment of Folk Illnesses Essay The world offers every people a chance to be sick due to some of the outside factors that can harm someone else’s health. There are hazards for the lungs like pollution and for the stomach which are the bacteria and microorganisms that are prevalent everywhere. Even with the body parts of a human being, one can already find some threats that can cause cholera or diarrhea in their faces or hands where there is staphylococcal party if not reproduction their colonies. Of course regarding some diseases, there are many classical methods that the old people think would help cure these hazards to health. There are also many documents that support the researchers’ views about the different ways our ancestors deal with their sicknesses before. Using the reference mentioned below, we can see that there are already developments in our ancestors’ way of thinking that they are devising strategies in order to cure their own illnesses by the naturally occurring cures that can be seen elsewhere then. Say, garlic is used to treat hypertension and oregano is used as an expectorant which I think is still effective until today. The concept of having a set of ready to pick and ready-made medicines gave the early people especially in Mexico that whatever disease they might be getting in the atmosphere or environment is curable and can easily be neglected after some time. However for this mind set, there might be some difficulties and disadvantages given that we already have technological diseases also. These conditions can be from the improvement and development of the facilities that we are using nowadays. The causes of disease in the present time are from complex matters such as chemical intoxication and suffocation due to the complexity of course of the activities we do everyday. These diseases might not be cured immediately by the set of the native way our old fellows treat their conflicts or struggles regarding their health. As what is already mentioned, the use of garlic as antibiotic is still useful. In fact the safety of using it was ranked with three positive signs, however, for extreme reasons, a bulb of garlic will not be enough to lower the blood pressure of a person. Hence, medical treatment is already needed in order to provide the patient the right medication and avoid the risk of killing him/her. For all we know, hypertension is also related with heart attack and some fatal heart disease. If in case there are some patients who got their diseases using the folk style of treating illnesses, it is still important that the doctor will have a set of explanations that will make the patient understand wholeheartedly that the old way of seeking for cure is not effective with their diseases. There should be some ready-answers so that the doctor will find it easy to make them understand and appreciate the modern way of curing. It will also be helpful if the doctor will be very careful of delivering the message to the patient not offending their traditions on using some herbs to medicate them. The patient in turn should be ready to accept the information a doctor might give him/her since he/she in the first place consulted or chose to seek for a doctor’s help. Health is an important aspect in a human’s life. It is a source of the driving force of every man that will enable them to pursue each day with joy and gladness. Folk style medication is as good as the modern medicine as long as people who use it understand how it works and how it is applied with every single disease corresponding to one substance or case. But as what many doctors say, it is really better to seek advice from experts who have already studied the concepts, what-about’s, how-about’s and where-about’s of different diseases. We might be harmed by the hearsays since the folk concepts are being transferred from a generation to another generation that there is a high possibility of misinformation and the like. It is a good thing we give attention to what our ancestors have given and developed, and good as it is, we are able to have doctors, scientists and nurses that modified, developed and improved our knowledge about our health enabling us to become healthier people. Reference Nancy Neff. Folk Medicine in Hispanics in the Southwestern United States. Retrieved 6 February 2008 from http://www.rice.edu/projects/HispanicHealth/Courses/mod7/mod7.html

Vocabulary :: essays research papers fc

Introduction One of the most fascinating aspects of words is that they all have a past. Some words in English, for example, can be shown to have been in place for more than 5000 years (P. Baldi, 1999). Ordinarily we pay little attention to the words we articulate; we concentrate instead on the meaning we intend to express and we are seldom conscious of how we express that meaning. Only if we make a mistake and we have to correct it or we have difficulty remembering a word we become conscious of our word. This means that most of us do not know where the word we use come from and how they come to have the meaning they do. English words come from several different sources. They developed naturally over the course of centuries from ancestral languages, they are also borrowed from other languages and we create many of them by various means of word vocabulary available to us today. History and morphology of the word Mother The idea of the mother goddess was invented in early ice age, some 25,000-30,000 years ago. She and her life giving breasts were called omma from which we have the words akin to maternal, matter, and mother. By the late ice age the Semites had shortened omma to om. The Dravidians of India are Semites who migrated to India after the ice age. They still call mother goddess omm. Om is also the present day Arabic word for female and mother. Omma became ma among the Iranians, meaning the female breast. From ma we have the Iranian maman. Also, we have the Iranian ma-Dar (earlier ma-tar) meaning breast which became mater in Latin, modor in Old English (725), madre in modern Italian, and mother in modern English (1425), (R.K.Barnhant, 2000). Collocation There are several words that fit together with the word mother.  Mother Country  Mother Nature  Mother Figure  Mother Tongue  Mother Board Connotation The word mother has a positive connotation as it describes maternal tenderness and affection although in American English mother could also mean motherfucker which carry a negative and vulgar meaning (Chambers, 1994). Semantic field relation The following are some semantic field relations to the word mother.  Father  Son  Daughter Semantic usage   Ã‚  Ã‚  Ã‚  Ã‚  REGISTER Mother  Ã‚  Ã‚  Ã‚  Ã‚  Very Formal British English Mum  Ã‚  Ã‚  Ã‚  Ã‚  Informal British English Mummy  Ã‚  Ã‚  Ã‚  Ã‚  Informal British English mainly used by children Mom  Ã‚  Ã‚  Ã‚  Ã‚  Informal American English Mommy  Ã‚  Ã‚  Ã‚  Ã‚  Informal American English mainly used by children Ma  Ã‚  Ã‚  Ã‚  Ã‚  Informal expression American and British English working class (often used with any much older woman)

Case Study of Starbucks

When the announcement was made in mid 2008 that Starbucks would be closing nearly three-quarters of its 84 Australian stores there was mixed reaction. Some people were shocked, others were triumphant. Journalists used every pun in the book to create a sensational headline, and it seemed everyone had a theory as to what went wrong. This case outlines the astounding growth and expansion of the Starbucks brand worldwide, including to Australia. It then shifts focus to describe the extent of the store closures in Australia, before offering several reasons for the failure and lessons that others might learn from the case. . Background Founded in 1971, Starbucks' first store was in Seattle's Pike Place Market. By the time it went public in 1992, it had 140 stores and was expanding at a breakneck pace, with a growing store count of an extra 40-60% a year. Whilst former CEO Jim Donald claimed that â€Å"we don't want to take over the world†, during the 1990s and early 2000s, Starbucks were opening on average at least one store a day (Palmer, 2008). In 2008 it was claimed to be opening seven stores a day worldwide.Not surprisingly, Starbucks is now the largest coffee chain operator in the world, with more than 15,000 stores in 44 countries, and in 2007, accounted for 39% of the world's total specialist coffee house sales (Euromonitor, 2008a). In North America alone, it serves 50 million people a week, and is now an indelible part of the urban landscape. But just how did Starbucks become such a phenomenon? Firstly, it successfully Americanised the European coffee tradition – something no other coffee house had done previously.Before Starbucks, coffee in its current form (latte, frappacino, mocha, etc. ) was alien to most US consumers. Secondly, Starbucks did not just sell coffee – it sold an experience. As founding CEO Howard Schultz explained, â€Å"We are not in the coffee business serving people, we're in the people business serving coffee† (Schultz and Yang, 1997). This epitomised the emphasis on customer service such as making eye contact and greeting each customer within 5 seconds, cleaning tables promptly and remembering the names of regular customers.From inception, Starbucks' purpose was to reinvent a commodity with a sense of romance, atmosphere, sophistication and sense of community (Schultz and Yang, 1997). Next, Starbucks created a ‘third place' in people's lives – somewhere between home and work where they could sit and relax. This was a novelty in the US where in many small towns cafe culture consisted of filter coffee on a hot plate. In this way, Starbucks positioned itself to not only sell coffee, but also offer an experience. It was conceived as a lifestyle cafe.The establishment of the cafe as a social hub, with comfortable chairs and music has been just as important a part of the Starbucks brand as its coffee. All this came with a premium price. While people were aware that the beverages at Starbucks were more expensive than at many cafes, they still frequented the outlets as it was a place ‘to see and be seen'. In this way, the brand was widely accepted and became, to an extent, a symbol of status, and everyone's must-have accessory on their way to work.So, not only did Starbucks revolutionise how Americans drank coffee, it also revolutionised how much people were prepared to pay. Consistency of product across stores, and even national boundaries, has been a hallmark of Starbucks. Like McDonald's, Starbucks claims that a customer should be able to visit a store anywhere in the world and buy a coffee exactly to specification. This sentiment is echoed by Mark Ring, CEO of Starbucks Australia who stated â€Å"consistency is really important to our customers †¦ a consistency in the product . . . he overall experience when you walk into a cafe . . . the music . . . the lighting . . . the furniture . . . the person who is working the bar†. So, whilst th ere might be slight differences between Starbucks in different countries, they all generally look the same and offer the same product assortment. One way this is ensured is by insisting that all managers and partners (employees) undergo 13 weeks of training – not just to learn how to make a coffee, but to understand the nuances of the Starbucks brand (Karolefski, 2002) and how to deliver on its promise of a service experience.The Starbucks formula also depends on location and convenience. Starbucks have worked under the assumption that people are not going to visit unless it's convenient, and it is this assumption that underlies their highly concentrated store coverage in many cities. Typically, clusters of outlets are opened, which has the effect of saturating a neighbourhood with the Starbucks brand. Interestingly, until recently, they have not engaged in traditional advertising, believing their large store presence and word-ofmouth to be all the advertising and promotion t hey need.Starbucks' management believed that a distinctive and memorable brand, a product that made people ‘feel good' and an enjoyable delivery channel would create repeat business and customer loyalty. Faced with near-saturation conditions in the US – by 2007 it commanded 62% of the specialist coffee shop market in North America (Table 1 ) – the company has increasingly looked overseas for growth opportunities.As part of this strategy, Starbucks opened its first Australian store in Sydney in 2000, before expanding elsewhere within New South Wales and then nationwide (albeit with 90% of stores concentrated in just three states: NSW, Victoria and Queensland). By the end of 2007 Starbucks had 87 stores, enabling it to control 7% of the specialist coffee shop market in Australasia (Table 1 ). By 2008, consumer awareness of Starbucks in Australia was 90% (Shoebridge, 2008), with each outlet selling, on average, double the number of coffees (270 a day) than the rest of Australia's coffee shops (Lindhe, 2008). . Expansion into Asia Starbucks currently operates in 44 markets and even has a small presence in Paris – birthplace and stronghold of European cafe culture. Beyond North America, it has a very significant share of the specialist coffee shop market in Western Europe, Asia Pacific and Latin America (Table 1) and these regions make strong revenue contributions (Table 2). It is in Asia that they see the most potential for growth as they face increasing competitive pressure in their more traditional markets.Half the international stores Starbucks plans to operate in the next decade will be in Asia (Euromonitor, 2006; Browning, 2008). Indeed, Starbucks has done well in international markets where there has not traditionally been a coffee drinking culture, namely Japan, Thailand, Indonesia and China. In effect it has been responsible for growing the category in these markets. The first Starbucks outside the US opened in Tokyo in 1996, and since then, Starbucks' Japanese stores have become twice as profitable as the US stores.Unsurprisingly then, Japan is Starbucks' best performing overseas market outside North America. More than 100 new stores open each year in Japan, and coffee is now more popular than tea in terms of both volume and value (Lee, 2003; see also Uncles, 2008). As opposed to their entry into the Australian market, Starbucks made small changes to its formula for the Japanese market; for example, the invention of a green tea frappucino, and the provision of smaller drinks and pastries to conform to local tastes.Starbucks arrived in China in 1998 and by 2002 had 50 outlets, and 165 outlets by 2006 (BBC News, 2006), quickly becoming the nation's leading coffee chain. Starbucks now sees China as its key growth market due to the size and preferences of the emerging middle class. In the Asia-Pacific region, Starbucks command of the specialist coffee shop market grew from 15% in 2002 to 19% in 2007 (refer to Table 2). The total market for cafes in China grew by over 135% between 1999 and 2004 to reach US$2. 6 billion.It is projected to grow another 144% by 2008 to reach US$6. 4 billion in sales. More specialty coffee shops are opening across China as a middle class with strong purchasing power emerges, although this rise in coffee consumption is highly concentrated in large cities such as Beijing, Shanghai and Guangzhou. Starbucks has said that it expects China to become its biggest market after the US and the plan is to open 100 stores a year (Euromonitor, 2006). Significantly, certain Western brands are valued by Chinese consumers and Starbucks appears to be one of them.A growing number of China's 500 million urbanites favour Starbucks for its ambience, which is seen as an important signal of service quality, and Starbucks' design concept rests easily with China's consumers, who tend to lounge with friends while sipping coffee. Its outlets in China frequently maintain larger seating a reas than average outlets in other countries, and plush chairs and davenports are provided to accommodate crowds that linger. However, success for Starbucks in China is not a given, and they will face several challenges in the coming years.China's accession to the WTO has led to the gradual relaxation of the policy governing foreign-owned retail outlets, and this will lead to more foreign investment and thereby competition (Lee, 2004). Several multinationals are engaged in selling coffee (including KFC, McDonald's, Yoshinoya, and Manabe), and a number of local brands have recently emerged, some even imitating Starbucks' distinctive green and white logo and its in-store ambience (notably Xingbake in Shanghai). Furthermore, the reduction of import tariffs on coffee will also encourage foreign investment in coffee. . The Australian retail coffee industry Australia's taste for coffee is a by-product of the waves of immigrants arriving on the country's shores following World War II. Euro pean migrants, predominantly Greeks and Italians, were the first to establish the coffee culture, which was later embraced more widely in the 1 980s. For decades Australians enjoyed a variation of the ‘lifestyle coffee experience' that Starbucks created from scratch in the US. Australians did not need to be introduced to the concept of coffee as many other countries did.Savouring a morning cup of coffee was already a ritual for many consumers. It is fair to describe Australia's coffee culture as mature and sophisticated, so when Starbucks entered Australia in 2000, a thriving urban cafe culture was already in place. This established culture saw Australians typically patronise smaller boutique style coffee shops, with people willing to travel out of their way for a favoured cup of coffee, especially in Melbourne where coffee has developed an almost cult-like following.For Australians, coffee is as much about relationships as it is about the product, suggesting that an impersona l, global chain experience would have trouble replicating the intimacy, personalisation and familiarity of a suburban boutique cafe. Furthermore, through years of coffee drinking, many Australians, unlike American or Asian consumers, have developed a sophisticated palate, enjoying their coffee straighter and stronger, and without the need to disguise the taste with flavoured, syrupy shots. This love of coffee is easily quantified. The Australian market is worth $3 billion, of which $1. billion relates to the coffee retailing market. For every cup of coffee consumed out of home, two cups are consumed at home (AustraIAsian Specialty Coffee Association, 2006). Per capita consumption is now estimated at 2. 3 kg-twice as much as 30 years ago. Whilst Australians are among the highest consumers of instant coffee in the world, they are increasingly buying coffee out of the home (Euromonitor, 2008c). More than 1 billion cups of coffee are consumed in cafes, restaurants and other outlets each year, representing an increase of 65% over the last 10 years.Even between 2000 and 2005, trade sales of coffee have increased about 18%. In 2007, the growth in popularity of the cafe culture resulted in trade volume sales growing at an annual rate of 5%. Some 31% of the coffee sold through foodservice is takeaway, and it is thought that ‘fast coffee' will be a growth area in future years (Euromonitor, 2008d). There is also a trend towards larger takeaway sizes, with 400 ml cups increasing in popularity (Euromonitor, 2008d). One might argue that Starbucks drove these trends, especially in regards to larger sizes.There are almost 14,000 cafes and restaurants serving a variety of coffee types in Australia, and during 2006/07, they generated $9. 7 billion in income (Australian Bureau of Statistics, 2008). However, despite these statistics, the coffee business does not guarantee success. As Paul Irvine, co-founder of Gloria Jean's notes, â€Å"Australia is a tough retail market a nd coffee retailing is particularly tough†. According to official statistics, the cafe business is not always profitable, with the net profitability of cafes falling to about 4%.For a cafe to be successful, it has to offer marginally better coffee than local competitors, and do so consistently. Coffee drinkers in Australia are discerning, and they will go out of their way to purchase a good cup of coffee. They are not as easily persuaded as people from other countries simply to visit their nearest cafe. Secondly, for a cafe to make a profit, it needs to turn over 15 kg of coffee a week The national average is 11 kg, so a cafe has to be above average to begin with to even make a profit. Any newcomer needs to understand this before entering the market.The other significant constraint on profitability is the cost of hiring baristas, with a good one costing between $1000 and $1500 a week (Charles, 2007). However, it seems that this is a necessary cost in order to deliver a superio r product. The question that then begs to be asked is: How well did Starbucks understand this existing coffee culture? Did they under-estimate the relational aspect of coffee purchasing in Australia, as well as the importance of the quality of ingrethents and the skills of the person making each cup?Did they overestimate the value consumers attach to the in-store experience and the ‘third place' concept? Or did they just look at the statistics regarding coffee consumption and think that operating in Australia was a license to print money? Did they simply see Australia as the next logical step to global domination? Starbucks has 87% of the US specialty coffee shop market, and only now is it beginning to feel pressure from non-traditional competitors such as Dunkin Donut, 7 Eleven, McCafe and Krispy Kreme (Burritt, 2007).However, in Australia, the competitive landscape is different. Gloria Jean's dominates the high-street part of the coffee retailing market and McCafe dominates the convenience end (Shoebridge, 2008). Other significant competitors include The Coffee Club and Wild Bean Cafe (an add-on to BP petrol stations) and Hudson's Coffee (see Table 3). All offer a similar in-store experience to Starbucks, with McCafe from 2007 onwards refurbishing many McDonald's stores to imitate the Starbucks' experience, albeit at the economy end of the market. 5. Growth grinds to a halt . . . store closuresIn recent times however things have started to go wrong for Starbucks. Internationally, company earnings declined as cashstrapped consumers faced record petrol prices and rising interest rates meaning they have had to pull back on gourmet coffee and other luxuries. Sales fell 50% in the last 2 years, the US share price fell more than 40% over the past year and profits dropped 28% (Bawden, 2008; Coleman-Lochner and Stanford, 2008; Mintz, 2008). Consequently, Howard Schultz, the founder and chairman of Starbucks, resumed the position of CEO in 2008 with the aim of revitalising the business.He slowed the pace at which stores were opened (and in fact closed more stores than he will open in the coming year), introduced key performance targets (KPTs) and an employee rewards system in the US, and simultaneously shut down every store in America for three and a half hours of staff training (Muthukumar and Jain, 2008). Customer-oriented initiatives have included the addition of more food, the launch of the Starbucks card and Starbucks express, and the provision of high-speed wi-fi internet access (Hota, 2008).Notably, Schultz acknowledges that the company's focus has been more on expansion than on customer service – the very thing that was at the heart of its unique value proposition. However, it seems that these measures were too late for the Australian operation. On 29th July 2008, Starbucks announced that it would be closing 61 of its 84 Australian stores (i. e. , 73%) by August 2008, resulting in a loss of 685 jobs. All of these stores had been under-performing (8 were in SA, ACT and Tasmania, 28 in NSW, 17 in Victoria and 8 in Queensland).This decline of Starbucks in Australia was not as sudden as many would have us believe and in fact some reports (Edwards and Sainsbury, 2008; Shoebridge, 2008) indicated that by late 2007 Starbucks already had: * accumulated losses of $143 million; * a loss of $36 million for that financial year; * lost $27. 6 million the previous financial year; * loans of $72. 3 million from Starbucks in the US; * was only surviving because of its US parent's support. These closures saw 23 stores kept open in prime locations in Sydney, Melbourne and Brisbane. But this begs the question: can a 23-store chain be viable for the brand in the long-term?Based on the approximate numbers in Table 3, Starbucks had a 6% share of stores in Australia before the closures; this has now fallen to a share below 2%. Even before the closures, Australasia represented only 1% of company sales (Table 2) and now the f igure is expected to be much lower. This may not make much commercial sense as it will be difficult to achieve economies of scale in terms of marketing and purchasing, and such small numbers are totally out of step with the clustering strategy adopted in its strongest markets -the US, Japan and China.However, it could also be argued that with Starbucks' strategy of global domination, it is unlikely that it will ever close its Australian business entirely. Whilst Starbucks' management have been keen to suggest that â€Å"this decision represents business challenges unique to the Australian market and in no way reflects the state of the Starbucks business in countries outside of the United States†, the US market has also suffered. By September 2008, 600 stores had closed (or were due for closure), with about 12,000 workers, or 7% of Starbucks' global workforce affected (Mintz, 2008).It should be noted that the situation in the US has only worsened as a result of the global fina ncial crisis. 6. So what went wrong? Opinions abound as to why Starbucks failed in Australia. Our research suggests there is some truth to many of these opinions. Whilst the troubled economy might seem an easy scapegoat, with people tightening their belts and eating out less, it is unlikely that this was the core problem as evidenced by the continuing growth of their competitors. Indeed, coffee is no longer considered a luxury item by many Australians, but rather an affordable part of their daily routine.Instead, there is substantial evidence to suggest a number of factors combined to bring about Starbucks' demise. 6. 1. Starbucks overestimated their points of differentiation and customer perceived value of their supplementary services â€Å"I just think the whole system, the way they serve, just didn't appeal to the culture we have here† Andrew Mackay, VP of the Australian Coffee Traders Association, in Martin (2008) Whilst there was initial curiosity and hype about Starbuck s, after trying it, many Australians quickly found that it failed to offer a particularly unique experience that was not offered by other chains or cafes.Given the strong established coffee culture and discerning palates of Australians, the core product – coffee – was not seen as particularly different from, say, a latte or short black from a good suburban barista, Gloria Jean's or Coffee Club. Its point of difference in Australia, where a coffee culture already existed, had to be in its supplementary or value-adding services – i. e. , its unique servicescape, engaging customer service, brand image and so on (Lovelock et al. , 2007).But was this worth a premium price, especially as the competition began replicating Starbucks in-store experience? Starbucks has since been harshly criticised by Australian consumers and the media. Their coffee has been variously described as ‘a watered down product', ‘gimmicky', and consisting of ‘buckets of milk'. These are not the labels you would choose to describe a coffee that aspires to be seen as a ‘gourmet' product. It has also been criticised for its uncompetitive pricing, even being described as â€Å"one of the most over-priced products the world has ever seen† (Martin, 2008).Even the idea of the third place has come under criticism – â€Å"why would you want to sit around a pretend lounge room drinking a weak and expensive coffee when you can go around the corner and have the real thing? † (Wailes, 2008). It seems that Starbucks' rapid expansion, its omnipresence, somewhat standardised store design and recent insistence on staff achieving various sales KPTs (key performance targets) such as serving ‘x' customers per hour, all combined to diminish the instore experience. The introduction of sales targets for front-line employees, for example, meant staff and baristas had less time to engage with customers.It began to stray too far from its roots and the very values upon which the brand was built. Some of these actions were forced upon Starbucks by emerging competitors seeking to imitate the brand, and thus gain a slice of the ever growing lifestyle coffee market. Starbucks' points of differentiation were systematically being eroded and, in a sense, the brand that taught the world that coffee is not a commodity was itself becoming one. 6. 2. Declining service quality The brand has also come under fire for declining customer service as it continued to expand.For example, the quality of baristas is said to have declined as Starbucks widened its pool of applicants in order to meet demand at new stores. Can a 17 year old high school student really compete with a boutique trained barista with a passion for coffee? By not offering a better experience and product than emerging direct competitors, Starbucks found itself undermined by countless high street cafes and other chains that were selling stronger brews at lower prices and often offering better or equal hospitality.Whilst they may have pioneered the idea of a ‘third place', it was an easy idea to copy, and even easier to better by offering superior coffee, ambience and service. Now, with so many coffee chains around, Starbucks have little point of differentiation, even wi-fi internet access has become commonplace across all types of cafe. Furthermore, while customers were offered promotional rewards for returning to Starbucks, the card-based scheme is no more sophisticated than equivalent me-too cards at Gloria Jean's, Coffee Club, Hudson's and many independent cafes.And as noted earlier, one of the things that set Starbucks apart from the competition – i. e. , acknowledging customers (often by name for regulars) within a few seconds of entering the store and seriously engaging with them, began to unravel when Starbucks imposed both customer service and sales targets for its cafes. The imposition of these targets plus an ever widening range an d complexity of coffees to remember and make to perfection, meant staff morale and inevitably customer service levels declined. In fact in the USA some staff were so disillusioned with the imposition of sales targets because it meant they simply didn't have time to engage with customers) they posted blogs openly stating that Starbucks had lost its way. Finally, it appears that Starbucks were not even delivering on their core promise of serving superior coffee in comfortable surroundings, thus justifying its premium price. By switching to vacuum packaged coffee, consumers are denied the store-filling aroma of the coffee beans. The switching of traditional coffee machines to automated espresso machines (which can make coffees 40% faster and move customers through the lines more quickly), has also resulted in a loss of ‘theatre' (Grove et al. 2000) for people wanting to see their coffee made that way and has also had implications for taste. In-store, it has been noted that there are fewer soft chairs and less carpeting, and Starbucks recently lost ground in the ‘service and surroundings' category of the Brand Keys 2007 Customer Loyalty Engagement Index (Cebrzynski, 2008). It seems that Starbucks is now less about the quality of the coffee, and is more about the convenience of faster service and being on every corner – whilst still charging a premium. 6. 3. Starbucks ignored some golden rules of international marketingIronically, it seems that the very thing that made Starbucks successful in the first place, its ability to adjust the original (European) business model and coffee tradition to local (US) conditions, is the thing that let it down. Whilst Starbucks has made minor changes to its menu in countries such as Japan and Saudi Arabia, it generally offers the same products all around the world. When the company came to Australia, it brought its ‘American' offering, simply bringing what worked in the US and applying it here, without rea lly understanding the local market.But with more than 235 ethnicities speaking more than 270 languages and dialects, companies wanting to get ahead in Australia need to be aware that they are not dealing with one homogeneous market. Unfortunately what worked in the US was â€Å"bitter, weak coffee augmented by huge quantities of milk and sweet flavoured syrups. Not so much coffee, as hot coffee-based smoothies†. For the Australian consumer raised on a diet of real espresso, this was always going to be a tough sell (Mescall, 2008) As McDonald's Australia chief executive Peter Bush noted, US retailers that have had trouble making it work in Australia (e. . , Starbucks, Denny's, Arby's, Taco Bell) are those that have â€Å"introduced formulae developed for US palates and for the US way of doing business . . . These formulae have, at best, modest relevance in Australia†. Peter Irvine, co-founder of Gloria Jean's, also noted that â€Å"US retailers often arrive in Australi a thinking the size of their overseas chains and the strength of their brands in other markets will make it easy for them to crack the local market. Their focus is on global domination rather than the needs of the local consumers†.Further, there is a strong sense in Australia of buying local, supporting the community, having relationships with the people you buy from, and supporting ethically-minded businesses. Starbucks clashed completely with that, whereas local stores can differentiate themselves as being local and non-corporate. Furthermore, some would argue that Starbucks has become a caricature of the American way of life and many Australians reject that iconography. Many are simply not interested in the ‘super-size' culture of the extra-large cups, nor want to be associated with a product that is constantly in the hands of movie stars. 6. 4.Expanding too quickly and forcing themselves upon an unwilling public In the US, Starbucks started in Seattle as a single sto re. In a nation bereft of a genuine cafe culture, that single store captured people's imagination, and soon became a second store, quickly followed by a third. Before long, Starbucks had become a demand-driven phenomenon, with everyone wanting a Starbucks in their local area. McDonald's grew exactly the same way in Australia, opening just one or two stores in each city – nowhere near enough to meet demand – thus creating an almost artificial scarcity, which created huge buzz around the brand experience.Krispy Kreme did the same. But when Starbucks opened in Australia, they immediately tried to impose themselves with multiple store openings in every city – adopting the US-model of expansion through store clusters. Australians were not given a chance to ‘discover' it. As Mescali (2008) points out â€Å"they took key sites, hung huge signs, made us order coffee in sizes and gave the coffees weird names. Starbucks said to us – ‘that's not how you drink coffee. This is how you drink coffee'†.They took the Coca-Cola strategy of being available wherever people looked, but this quickly led to market saturation. Their expansion did not hurt their competitors so much as themselves, and they found themselves cannibalising their own stores. Furthermore, by becoming too common, the company violated the economic principles of cultural scarcity and the novelty wore off. By having too many outlets, becoming too commercial and too widely used, it began to lose its initial appeal of status and exclusivity. It began to have a mass brand feel, certainly not the warm feeling of a neighbourhood cafe.Furthermore, they became more reliant on less affluent consumers who now, with a worsening economy, are spending less, making Starbucks more vulnerable to economic fluctuations. 6. 5. Entering late into a highly competitive market â€Å"In America, Starbucks is a state of mind. In Australia, it was simply another player. † Barry Urqu hart, quoted in Delaney (2008) From Day I1 Starbucks got off on the back foot. They lacked the first-mover advantage they had in the US and Asia, finding themselves the late entrant in an already very developed, sophisticated and competitive market.Indeed, the competitive landscape in the Australian retail coffee market is very different to that of other countries. Here, Starbucks found themselves competing with hundreds of independent cafes and speciality coffee chains (see Table 3), where the coffee was generally better and the staff knew their customers by name. Significantly, they were also the last of the major chains to gain a presence in Australia. 6. 6. Failing to communicate the brand Worldwide, Starbucks rarely employs above-the-Iine promotion, and this was also the case in Australia.Instead, they maintained that their stores are the core of the business and that they do not need to build the brand through advertising or promotion. Howard Shultz often preached, â€Å"Buil d the (Starbucks') brand one cup at a time,† that is, rely on the customer experience to generate word-of-mouth, loyalty and new business. But in a market as competitive as Australia, with a consumer whose palate is discerning and whose loyalty often lies with a specific barista, advertising and promotion was essential to communicate the Starbucks message.The issue is not so much about building awareness – which, at 90%, is high – but to communicate what the brand means and to give consumers reasons for patronising Starbucks. Their lack of advertising made this branding issue even worse, with many people unable to articulate why they should be loyal to Starbucks. At the same time, competitors were communicating their messages very effectively – McDonald's, for instance, is a heavy spending, award-winning, advertiser in the Australian market.Added to which, more subversive counter-messages were coming from those who saw in Starbucks a ‘brand bully' ri ding rough shod over the nuanced tastes and preferences of local cultures (Klein, 2000; Clark, 2008). In other words, a range of strong contrary messages were undermining Starbucks' own very limited communications. 6. 7. Unsustainable business model Starbucks' product line is limited primarily to coffee. Sometimes a new product idea will be developed, such as the Frappucino, but these tend to have limited product life cycles and/or are seasonal.For example, the Frappucino has traditionally made up 15% of (summer) sales, but recently sales have been down, suggesting that customers are already bored with it (Kiviat, 2008). Furthermore, in the instance where other products were offered, people failed to purchase them as they only really associate Starbucks with coffee and generally seek food elsewhere. This is a very different model to The Coffee Club which has much more of a cafe feel to it, or McDonald's which has a full range of breakfast and lunch/dinner items that can be complemen ted by a McCafe latte.Hence the average transaction value at Starbucks is lower than its competitors, and therefore more customers must pass through its doors to reach the sales and profit levels of its competitors. It also creates conflict with the Starbucks ethos of the third place (and allowing people to sit around for 30 minutes sipping lattes and reading, talking or surfing) versus the need to get people in and out quickly and not take up valuable ‘real estate' (which in itself means that the average Starbucks store needs to be much bigger than the average cafe).Unlike most of the other retail coffee chains, Starbucks does not use a franchise model, preferring to lease and fit-out its own outlets. This means more cash is being spent upfront, and in Starbucks' case, more debt accrued. But adopting a franchise model would have numerous other advantages than just minimising this. It would mean that local investors, with a good sense of the local market, put their own money i nto the business and take an active role in running it and shaping its direction. 7.What are the main lessons from this case study? Several key lessons emerge that should be of interest to both domestic and international marketers. 7. 1. Crossing international borders is risky and clearly Starbucks did not do their homework, or ignored their homework Well conceived market research involving both primary and secondary data, including qualitative and quantitative approaches, would have uncovered the extent of the ‘coffee culture' that existed in 2000 when Starbucks entered the Australian market.It seems inconceivable that Starbucks management, or at least its Australian representatives, were not sufficiently apprised of the extent to which many consumers were already well acculturated in terms of buying and consuming European styles of coffees such as short black, lattes and cappuccinos, nor the extent to which many customers were in fact loyal to their suburban cafe or competit ive brands such as Gloria Jean's. As a late market entrant, Starbucks clearly failed to do thorough homework on the market before entry – this is a failure in terms of due diligence.Alternatively, they chose to ignore the messages that were coming from any due diligence that they had undertaken. This may or may not have been due to some arrogance on the part of Starbucks, or due to the fact that they considered they had a strong global brand which would meet with universal acceptance. An example of where Starbucks did do its homework, and act on it, was in France when it entered that market in 2006, establishing a cafe in the middle of Paris.Research had clearly shown the American way of consuming and socialising over a coffee was an anathema to many French, so Starbucks held back from entering the French market and when they finally entered it was with great trepidation, expanding at a very slow pace and testing the market at every step. 7. 2. â€Å"Think global but act loc al† This familiar maxim in international marketing should be well understood. While Starbucks had brand awareness as a major global brand, it failed to adapt the product and the customer experience to many mature coffee drinkers in Australia.As noted earlier, all the evidence suggests that it simply tried to transplant the American experience into the Australian market without any adaptation. In particular, it failed to adapt either its core product or its supplementary services to create the intimacy, personalisation and familiarity that is associated with established boutique cafes in Australia. 7. 3. Establish a differential advantage and then strive to sustain it A question of strategy that Starbucks perhaps failed to address was, â€Å"Is our product differentiation sustainable in the long term and does it ontinue to justify a price premium? † As noted earlier, it can be argued that the core product in this case, that is the coffee itself, is essentially a commodit y, and that Starbucks' coffee, according to many consumers, was no different to the competition, and in some cases inferior. Then Starbucks' points of difference clearly revolved around its brand image and supplementary services. It was these supplementary services, such as its unique servicescape and excellent customer service, that they used to justify a premium price. However, as competitors (e. g. The Coffee Club) quickly imitated the ‘Starbucks experience' (i. e. , their supplementary services, ambiance, etc. ), by providing premium coffee and an intimate casual experience, Starbucks' value proposition began to fade. In other words, their key points of difference could be easily imitated and were not sustainable. Faced with this scenario, the onus was on management to re-fresh and evolve any lingering differential advantage that Starbucks might have had or, at the very least, give customers reasons to continue patronising Starbucks through its communications. 7. 4.Don't l ose sight of what made you successful in the first place As more and more competitors emerged, both individual cafes and chains such as Gloria Jean's and The Coffee Club, competitive pressures forced Starbucks to impose rigid sales targets on their frontline staff including baristas to increase store productivity. However, the imposition of these KPTs and the pressure to serve more customers more quickly meant that Starbucks forgot the very thing that made it unique in the early days, namely, to provide a customer experience in an intimate casual setting that set it aside from competitors.As more pressure was placed on staff to have higher throughput, this meant that baristas and other employees had little time to engage with customers. In other words, Starbucks forgot about the very things that made it unique in the first place. This is akin to the Wheel of Retailing hypothesis (Hollander, 1960) where a no-frills retailer gradually moves upmarket in terms of variety of product, pri ce and more services and within several years finds itself competing with the more established premium supermarkets that were the very competitors that they tried to distance themselves from in the first place.The only difference with Starbucks is that it reversed the direction of the Wheel – by gradually moving downmarket it brought itself into direct competition with cheaper operators and lost sight of what made it successful in the first place. 7. 5. Consider the viability of the business model It has to be questioned whether the Starbucks' business model is viable in the long term, or even the medium term. A business model that uses a premium price to justify the excessive floor space and elaborate servicescape, and allows customers to sit in this environment for an hour sipping one latte, has to be questioned.Given that Starbucks do not have the array of products that, say, a McDonald's might have and, as documented earlier in this case, therefore do not generate the sam e sales volumes and revenues, it is hard to see how the Starbucks' model is financially viable. 8. Conclusion In summary, it appears on all the evidence that Starbucks not only misjudged the Australian coffee culture but also misjudged the extent of the competition, and failed to adapt its offering to the local market.Furthermore, with the advent of high quality barista training, the availability of premium coffee beans and the technology to produce a high quality cup of coffee (at a modest cost), sole operators who knew their customers by name, were able to set up business as viable competitors. 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